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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Future minimum lease payments for operating leases with initial or remaining terms of one year or more were as follows at July 2, 2004
(lease payments are shown net of sublease income):
Total rent expense for all land, facility and equipment operating leases was approximately $23 million, $24 million and $23 million for
fiscal years 2004, 2003 and 2002, respectively. Total sublease rental income for fiscal years 2004, 2003 and 2002 was $6 million, $8 million
and $8 million, respectively. The Company subleases a portion of its facilities that it considers to be in excess of current requirements. Total
future lease income to be recognized for the Company’s existing subleases is approximately $16 million.
Capital Expenditures —The Company’s commitments for construction of manufacturing facilities and equipment approximated $176
million at July 2, 2004.
9. Legal, Environmental, and Other Contingencies
Operating
Leases
(in millions)
2005
$
15
2006
20
2007
5
2008
5
2009
4
After 2009
102
$
151
Intellectual Property Litigation
Convolve, Inc. and Massachusetts Institute of Technology (“MIT”) v. Seagate Technology LLC, et al. Between 1998 and 1999,
Convolve, Inc., a small privately held technology consulting firm founded by an MIT Ph.D., engaged in discussions with Seagate Delaware
with respect to the potential license of technology that Convolve claimed to own. During that period, the parties entered into non-disclosure
agreements. The Company declined Convolve’s offer of a license in late 1999. On July 13, 2000, Convolve and MIT filed suit against Compaq
Computer Corporation and the Company in the U.S. District Court for the Southern District of New York, alleging patent infringement,
misappropriation of trade secrets, breach of contract, tortious interference with contract and fraud relating to Convolve and MIT’s Input
Shaping
®
and Convolve’s Quick and Quiet
TM
technology. The plaintiffs claim their technology is incorporated in Seagate’s sound barrier
technology, which was publicly announced on June 6, 2000. The complaint seeks injunctive relief, $800 million in compensatory damages and
unspecified punitive damages. The Company answered the complaint on August 2, 2000 and filed counterclaims for declaratory judgment that
two Convolve/MIT patents are invalid and not infringed and that it owns any intellectual property based on the information that the Company
disclosed to Convolve. The court denied plaintiffs’ motion for expedited discovery and ordered plaintiffs to identify their trade secrets to
defendants before discovery could begin. Convolve served a trade secrets disclosure on August 4, 2000, and the Company filed a motion
challenging the disclosure statement. On May 3, 2001, the court appointed a special master to review the trade secret issues. The special master
resigned on June 5, 2001, and the court appointed another special master on July 26, 2001. After a hearing on the Company’s motion
challenging the trade secrets disclosure on September 21, 2001, the special master issued a report and recommendation to the court that the
trade secret list was insufficient. Convolve revised the trade secret list, and the court entered an order on January 1, 2002, accepting the special
master’s recommendation that this trade secret list was adequate. On November 6, 2001, the U.S. Patent and Trademark Office (“USPTO”)
issued U.S. Patent No. 6,314,473 to
88